Never Fear

Security Products and Executive Recruiting

Vimal Vaidya, 39

Business:RedCannon Security, a Fremont, California, developer of computer security software products
Founded: February 2003
Start-Up Costs: Significant, says Vaidya-at least a few million. Privately funded, he adds.
Revenue So Far: More than $100,000
Employees: 24, including some on-call consultants

Vaidya's Background: This is his fourth company, so he knows a thing or two about starting a business, no matter what the economy.

Vaidya's Top Three Tips for Start-Ups:

1. Is there enough distinction between what you're offering and what your competitors offer? "If I can clearly say 'yes,'" says Vaidya, "that's a good indication that I have a business."

2. Have a sound business model. "You need to know what you're going to build, how much will it cost, how much you are going to ask for each product," says Vaidya. "This is important to ask, no matter what the business or economy. But in a bad economy, if you can't answer these questions, you're going to fall with a harder impact."

3. You need conviction. "If I'm convinced I have a business, then I can say, 'Yes, the economy is bad, but it's never going to last forever.' It's that conviction that can get you through all of the rough days," he says. "And I have weathered a few of those rough days."

Vaidya's Final Two Cents: "You have to develop the best strategy you can. It's much easier to set the course than to turn back because you have a problem."

Julie Kampf, 42

Business:JBK Associates Inc., an Englewood, New Jersey, business that recruits executives for the health-care and consumer products industries
Founded: Incorporated in the spring, JBK was actually launched in late October 2003.
Start-Up Costs: $25,000 in the first month, for office rent, office equipment, Web development and various consultants
Revenue So Far: More than $75,000, even before she officially launched. There's a lesson here.
Employees: Two

Kampf's Background: Kampf spent 17 years in the fashion industry working in sales and marketing, and four years in the recruiting field at small and midsize firms.

Kampf's Top Three Tips for Start-Ups:

1. Build your infrastructure. Try to make sure everything-or almost everything-is in place before opening for business. Because Kampf took her time between incorporating and actually shouting to the world, "Hey, look at me," she was able to line up clients before opening, which meant income was already streaming in.

2. You've got to have passion. "I love what I'm doing 24/7, and I couldn't say that about anything I did before this." Even if the phone rings less when the economy is down, as long as you love your business, you'll usually feel good. Since Kampf apparently realizes you can't pay the electricity bill with your winning smile, she adds that whenever it's feasible, you should sock away money into a "rainy day savings [account]."

3. Understand your chosen industry. Even when the economy is going backward, the health-care industry moves forward, albeit slowly. Kampf admits, "If all I knew how to do was recruit executives in technology, I might not have started this." All the passion in the world can't force an industry to grow.

Kampf's Final Two Cents: "Starting a business is like having a baby. There really is no good time."

Saving Grace
Saving money is always important, but especially when you're starting a business. We asked our 2003 entrepreneurs for ABCs on how to penny-pinch, and here's what they had to say:

A is for Auction. Alan Crancer saved a lot of money by buying equipment and office furniture at local auctions. Plus, "They're fun and interesting to attend, and most are on the weekend," he says.

B is for Buck. "Before I spend one dollar outside of the basic expenses, like payroll or recurring expenses," says Vimal Vaidya, "I need to be convinced that by spending it on an employee or department, it will either generate or save the company [money] in sales or productivity or costs."

C is for College Interns. "Whether it be for graphic design, production or clerical work, students are usually hungry for resume- and portfolio-builders," observes Laura Osborne. "More important, they are usually talented, hardworking and incredibly energetic. Not to mention very cheap, if not free."

D is for Divvying It Up. Julie Kampf uses her accountant only for the big things, while she handles the payables, receivables and other accounting responsibilities "until such time [as] it is more cost-effective for someone else to perform these functions." She's also not shy about asking friends or family to occasionally throw in a free helping hand.

E is for Embellishing Your Store. You want your store to have some style and class, but you don't have the money? Yana Drogobetsky says, "Instead of investing money in artwork for the store, we had a display of a local artist's works exhibited throughout our showroom." The plus? Not only did Drogobetsky save money on decorating, she also found a way for her store to become involved with the community, which is always a good thing.

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

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This article was originally published in the February 2004 print edition of Entrepreneur's StartUps with the headline: Never Fear.

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